Allocation and banking in Korean permits trading
AbstractThis paper investigates how Korean industry would respond to four different allocation and banking options in CO2 permit trading within a fully dynamic computational general equilibrium framework. Four different allocations are categorized--a uniform allocation and three performance-based allocations. We explore that performance-based allocation and banking lower losses in Korean potential GDP, allowing energy-intensive industry more flexibility in inter-temporal decision making on purchasing and selling permits. The steel industry can derive a particular advantage from a performance-based allocation with respect to energy use, while the semiconductor industry would prefer a performance-based allocation with respect to value-added. The two key conclusions are (i) the Korean economy should replace an absolute allocation with a performance-based allocation, and (ii) the banking of permits enables market players to reallocate allowances more efficiently in a long-term commitment period. These results support the findings of the key study by Kling and Rubin (1997).
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Bibliographic InfoArticle provided by Elsevier in its journal Resources Policy.
Volume (Year): 35 (2010)
Issue (Month): 1 (March)
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Web page: http://www.elsevier.com/locate/inca/30467
Permits trading Bankable permits Performance-based allocation Initial allocation Dynamic CGE modeling;
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